1.  We have audited the attached Balance Sheet of VIJAY TEXTILES
 LIMITED as at 31.03.2012, the Statement of Profit & Loss and the Cash
 Flow Statement for the year ended on that date annexed thereto. These
 financial statements are the responsibility of the Company''s
 Management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with the auditing standards
 generally accepted in India. Those Standards required that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes, examining on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes,
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditors'' Report) Order, 2003, issued
 by the Central Government of India in terms of Sub-section (4A) of
 Section 227 of the Companies Act, 1956 of India, we enclose in the
 Annexure, a statement on the matters specified in paragraphs 4 & 5 of
 the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 a.  We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 b.  In our opinion, proper books of accounts as required by law have
 been kept by the Company so far as appears from our examination of
 those books;
 
 c.  The Balance Sheet, Statement of Profit & Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 accounts;
 
 d.  In our opinion, the Balance Sheet, Statement of Profit & Loss and
 Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in Sub-Section (3C) of Section 211 of
 the Companies Act, 1956;
 
 e.  On the basis of written representations received from the
 Directors, as on 31.03.2012 and taken on record by the Board of
 Directors, we report that none of the Directors is disqualified as on
 31.03.2012 from being appointed as a Director in terms of Clause (g) of
 Sub-Section (1) of Section 274 of the Companies Act, 1956;
 
 f. In our opinion and to the best of our information and according to
 the explanations given to us; the said accounts read together with the
 accounting policies and notes forming part of accounts give the
 information required by the Companies Act, 1956, in the manner so
 required and give a true and fair view in conformity with the
 accounting principles generally accepted in India:
 
 i.  In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012; ii.  In the case of the Statement of
 Profit & Loss, the Profit for the year ended on that date; and iii.  In
 the case of the Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT:
 
 Re: VIJAY TEXTILES LIMITED
 
 [referred to in paragraph 3 of our report of even date]
 
 (i) a.  The Company is maintaining proper records showing full
 particulars including quantitative details and situation of fixed
 assets.
 
 b.  All the assets have not been physically verified by the Management
 during the year but there is a regular programme of verification, which
 in our opinion, is reasonable having regard to the size of the Company
 and the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 c.  During the period, the company has discarded/identified for
 disposal certain items of its fixed assets, which are no longer in use.
 In our opinion and according to the information and explanations given
 to us, the aforesaid disposal has not affected the going concern
 assumption.
 
 (ii) a.  The inventory has been physically verified by the management
 during the year. In our opinion, the frequency of verification is
 reasonable.
 
 b.  The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 c.  The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) a.  The Company has not granted loans, secured or unsecured, to
 companies, firms, or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 b.  During the year the Company has taken unsecured loans from two
 parties, a sum of Rs 4582.5 Lakhs and repaid Rs 9318.91 Lakhs to three
 parties and the total amount outstanding as on 31.03.2012 was Rs 2305.74
 Lakhs payable to two parties covered under register maintained under
 Section 301 of the Companies Act, 1956.
 
 c.  In our opinion, the rate of interest and other terms and conditions
 on which loans were taken from Companies, Firms, or other parties
 covered under the register maintained under Section 301 of the
 Companies Act, 1956, are not prima facie, prejudicial to the interest
 of the Company.
 
 d.  According to the information and explanation given to us, the
 Company is regular in repayment of the principle and interest.
 
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to the purchases of inventory, fixed assets and
 with regard to the sale of goods and services. During the course of our
 audit, we have not observed any continuing failure to correct major
 weaknesses in internal controls.  (v) a.  According to the information
 and explanations given to us, we are of the opinion that the
 transactions that need to be entered into the register maintained under
 section 301 of the Companies Act, 1956 have been so entered.  b. In
 our opinion and according to the information and explanations given to
 us, the transactions made in pursuance of contracts or arrangements
 entered in the register maintained under Section 301 of the Companies
 Act, 1956 have been made at prices which are reasonable having regard
 to prevailing market prices at the relevant time.  (vi) The Company has
 not accepted any deposits from the public within the meaning of
 Sections 58A, 58AA or any other relevant provisions of the Companies
 Act, 1956 and the rules framed there under.  (vii) In our opinion, the
 Company has an internal audit system commensurate with its size and
 nature of its business.
 
 (viii) We have broadly reviewed the books of account relating to
 materials, labour and other items of cost maintained by the Company
 pursuant to the Rules made by the Central Government for the
 maintenance of cost records under Section 209 (1) (d) of the Companies
 Act, 1956 and we are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained. We have not,
 however, made a detailed examination of the records with a view to
 determine whether they are accurate or complete.
 
 (ix) a.  According to the information and explanations given to us and
 on the basis of the examination of the records of the company, amounts
 deducted/accrued in books of account in respect of undisputed statutory
 dues including Provident Fund, Investor Education and Protection Fund,
 Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service
 tax, Customs duty, Excise duty, Cess and other material statutory dues
 have been regularly deposited during the year by the Company with the
 appropriate authorities.
 
 b.  According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Employees''
 State Insurance, Income tax, Wealth tax, Service tax, Sales tax,
 Customs duty, Excise duty, Investor Education and Protection Fund, Cess
 and other material statutory dues were in arrears, as at 31.03.2012 for
 a period of more than six months from the date of became payable.
 
 c.  According to the information and explanations given to us, the dues
 referred in note 27(1)(a) in respect of income tax have not been
 deposited with appropriate authorities on account of appeal filed.
 According to the information and explanations given to us there are no
 dues of Sales tax, Service tax, Municipal tax, Custom duty, Excise duty
 and Wealth tax which have not been deposited with the appropriate
 authorities on account of any dispute.
 
 (x) In our opinion, the Company has no accumulated losses as at
 31.03.2012 and it has not incurred any cash losses in the financial
 year ended on that date or in the immediately preceding financial year.
 (xi) According to the information and explanation given to us, the
 Company has not defaulted in repayment of dues to financial
 institutions, bank and debenture holders as at balance sheet date.
 (xii) In our opinion and according to the information and explanations
 given to us, the Company has not granted loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 Accordingly the provisions of clause 4(xii) of the Companies (Auditors''
 Report) Order, 2003 are not applicable to the Company.  (xiii) In our
 opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/
 society.  Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditors'' Report) Order, 2003 are not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause 4
 
 (xiv) of the Companies (Auditors'' Report) Order, 2003 are not
 applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions during the year.  (xvi) In our opinion,
 the term loans have been applied for the purposes for which they were
 raised.  (xvii) According to the information and explanations given to
 us and on the overall examination of the balance sheet of the Company,
 we report that no funds raised on short-term basis have been used for
 long term investments.
 
 (xviii) According to the information and explanation given to us, the
 Company has made preferential allotment of 50,00,000, 10%
 Non-Convertible Cumulative Redeemable Preference Shares at Rs 100/- each
 at par in the year to parties covered in the register maintained under
 Section 301 of the Companies Act, 1956. In Our opinion, the price at
 which preference shares have been issued is not prejudicial to the
 interest of the Company.  
 
 (xix) According to the information and explanation given to us, the
 Company has not issued any debentures.
 
 Therefore, the provisions of clause 4
 
 (xix) of the Companies (Auditors'' Report) Order, 2003 are not
 applicable to the Company.
 
 (xx) According to the information and explanation given to us, the
 Company has not raised any money by public issues during the year.
 Accordingly, the provisions of clause 4(xx) of the Companies (Auditors''
 Report) Order, 2003 are not applicable to the Company.  
 
 (xxi) According to the information and explanations given to us, no
 fraud on or by the Company has been noticed or reported during the
 course of our audit.
 
                                              For LAXMINIWAS NEETH & CO
 
                                       Firm Registration number:002460S
 
                                                  CHARTERED ACCOUNTANTS
 
 Place: Secunderabad                                (LAXMINIWAS SHARMA)
 
 Date: 29th May, 2012                                           Partner
 
                                                   Membership No.014244